How I avoid 'expensive months’

Avoid expensive months to ensure regular savings

I've recently visited France and before going I was wondering what the cheapest way was to have access to my money abroad without carrying large amounts of euros. Being frugal I didn't want to spend lots, but rather have access to money in case of an emergency.

Whilst researching cheap ways to pay by card abroad I came across two popular services that offer this - Starling and Monzo. I settled on Starling as I could withdraw the most whilst abroad. Moreover it allowed me to withdraw Euros from a GBP account at better rates than my current account.

Having quickly set up the account - a matter of minutes - I started to explore.

Starling bank offers a feature called 'Spaces’ - allowing you to create little pots separate from the main account to store money. For the sake of comparison Monzo offers a similar feature.

For the past year or so since starting working life I had struggled with balancing various one off or irregular expenses (e.g. car MOT) with wanting to be able to save a constant amount towards buying a house.

To that end I set up a couple of savings account to cover the big expenses - for the car (insurance, MOT, service, tax) and Christmas/birthday presents.

But as I looked at the number of yearly/irregular expenses I had - clothes, dentists, buying a new phone (definitely not yearly!), opticians etc - I realised that this is where Starling spaces could come into play.

Implementation

To that end I have set up two standing orders to Starling:

  • Yearly/irregular costs
  • 'Capital’ expenditure

The first covers things I will spend money on each year most likely - clothes, shoes, dentist, etc.

The 'Capital expenditure’ is for replacing larger items or household items when they eventually need replacing. For example a new phone, replacement car, fridge freezer for when we outgrow it, new computer, etc.

Then on Starling I've set up a separate space for each of the above little things - e.g clothes, computer etc.

  Use spaces on Starling bank for budgeting
Automatically move money to spaces each month

A few days after the standing order is due in I've set it up so that the money from the standing order gets split on the appropriate way into the various spaces.

This way, with a little bit of planning ahead, I can avoid ‘expensive months’ in order to consistently save planned amounts.

More about Starling in action abroad

During my trip to France we did indeed spend all our euros, hell it was worth it. This left us with no euros and we wanted some snacks on the journey home. Enter Starling.

First, the overpriced 'duty free'. We set our eyes on half a kilogram of chocolate to keep us going until we got home. Upon paying at the till I was presented with an option to choose between paying in GBP or in EUR, where I selected euros because that means I use the mastercard exchange rate rather than the exchange rate used by the merchant. Instantly I got a notification from Starling on my phone with the amount in pounds. One satisfied customer.

Of course, as we all know you cannot simply eat chocolate without a refreshing drink afterwards. Having been restrited in the amount of liquid we could take this required us buying water bottles. A true trip off. Anyway, Starling worked wonderfully.

Some on Starlings forums (now closed) have noted that the GBP amount may be subject until the transaction has been settled. So be aware that the GBP amount may fluctuate.

This article was updated on 2 October 2018